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Softer crude prices, weaker energy stocks, rising political risk in Europe and an upcoming Federal Reserve rate call: It all adds up to a cautious feel to early trade at the start of a big week.

Here’s what you need to know:

US West Texas Intermediate crude is at $51.16 a barrel, having fallen under $48 for the first time in more than three months. Brent crude, the international benchmark, is down 0.4 per cent at $51.17. The index tracking the European oil and gas sector is 0.2 per cent weaker.

The pound is holding above $1.22 — up 0.4 per cent at $1.2213 — as speculation mounts that the UK government is poised to trigger Article 50 of the Lisbon treaty, the process that begins two years of formal talks on the country’s exit from the EU.

Against the euro, sterling is 0.4 per cent stronger with £0.8742 required for a unit of the shared currency.

European stocks are lacking lustre. London’s FTSE 100 is up 0.3 per cent, while the Xetra Dax 30 in Paris is flat. The CAC 40 is up 0.1 per cent. The region-wide Euro Stoxx 600 is up 0.1 per cent. Some of the most notable falls are on the downside, led by energy stocks. BP is the biggest faller on the main London index, down 1.7 per cent. Royal Dutch Shell is down 0.6 per cent.

Ahead of Wednesday’s general election in Holland, the euro is up 0.5 per cent at $1.0705.

The Federal Reserve meets to set US monetary policy on Wednesday, when it could lift rates for the third time in the tighening cycle since the Financial Crisis.

“We expect another 25 basis hike in the US policy rate,” says Peter Goves at Citi. “The significant shift in market pricing has made very specific the Federal Open Market Committee’s previously ambiguous view that a further rate hike would be appropriate ‘fairly soon’. This has been inspired by improved sentiment data in the US and recent speeches by policymakers.”

Ian Williams at Peel Hunt agrees, calling such a move from the FOMC is “a done deal following some very clear steers from Fed officials in recent weeks”, adding that “the February labour market data released last Friday have surely sealed the decision.”

Ahead of the potential move from the US central bank, the dollar index is down 0.2 per cent at 101.06, moving off its recent two month-highs reached.

West Texas Intermediate crude briefly dropped below $48 per barrel earlier, pointing to further pressure on the US oil benchmark. The US oil price suffered its sharpest one-day sell-off in 13 months last Wednesday — and fell 7 per cent last week, breaking out of a trading range that was established for months — hit by news of rising crude stocks.

Brent crude, the international benchmark, fell as much as 1 per cent to $50.85 a barrel.